The US is “deliberately destroying international order”, announced China’s official Communist Party Newsletter the day after the White House branded China a currency manipulator – following the latest Yuan devaluation. The tug of words has pressured already tanking stocks further down. US indexes led losses yesterday, the Nasdaq losing 3.47%. The move also increases chances of further Fed rate cuts, turning, what Fed Head Powell said was not a trend, into one. Adding to the pressure, the US Defence Department indicated Saturday that it would add intermediate-range missiles in the Asian region, this after withdrawing from the ban pact with Russia last week. In response, a Chinese foreign ministry official said that China would not “stand idly by”. And in a final body-slam, Chinese companies have completely ceased the purchase of US agricultural goods, threatening to increase tariffs on them in response to Trump’s Thursday Tweet. Meanwhile, Markit’s services and composite PMI for the US improved by a half point in July, while the Institute for Supply Management (ISM) presented a 2-point reduction in non-manufacturing activities.
Asian markets also continue bleeding this morning, with Shanghai down a point and a third and the Hang Seng and Nikkei contracting less than a percent. Australia’s S&P/ASX led the pack, losing 2.44% this morning after the nation’s central bank left interest rates at 1%, this as June’s trade surplus increased to $8.036 bn. New Zealand’s unemployment rate fell 3 ticks to 3.9% in the year’s second quarter, while Japan overnight reported a 0.4% improvement in labour cash earnings and another 2.7% increase in overall household spending. The nation’s leading economic index, however, is down a half point to 93.3 in June. In one more indication that the world is at war, Air China announced yesterday that it was suspending flights to Hawaii.
Welcome news in Europe is this morning’s factory orders from Germany – a 2.5% increase month-on-month in June, following May’s 2.2% contraction, which improves the year-on-year figure to -2.6%. Yesterday’s composite and services PMIs from that nation fell a point, the zone’s data remaining stable and Britain, France and Italy improving (the former’s services by a full point and a ½), while investor confidence throughout the zone fell to a dramatic low of -13.7 points. Markets closed in the dismal red yesterday, led by the FTSE’s 2.47% plunge, dropping it well below pre-quarterly earnings’ gains. Less welcome, was the British Retail Consortium’s announcement last night of the weakest same-store sales growth index in 20 years – since record taking was implemented. The UK yesterday announced it would join the US maritime security mission in the Persian Gulf, where 2 tankers have been seized by Iran in as many weeks.
With the Chicago Board Options Exchange’s VIX volatility index hitting 23 overnight, gold, yen and other safe-havens reached a peak – $1487 per troy ounce in gold’s case – and retreated on what is most probably profit-taking. Interestingly, over its weekend surge, Bitcoin seems to be tracking gold as the asset’s volatility begins easing out. CoinDesk this morning reveals that over 100 thousand new miners – a predominantly large percentage of them in China – have gone online in the past fortnight, raising the blockchain’s required computing power to new records. Oil traders also locked in profits yesterday, pushing prices up from their $54 low, where it formed a bounce beginning on Trump-Thursday. Rising back above the 55-mark is proving tricky.
Japan’s Fair-Trade Commission has announced an investigation into Apple’s alleged forcing of firms to provide free technology as a contractual term – this as shares yesterday plummeted 5% yesterday. And, after HSBC’s stellar trade-war earnings performance, Disney is also expected to report excellent results today after the US market close. Disney has surprised to the upside 8 times out of 10 in the past 2.5 years and outperformed the S&P benchmark by a ratio of 29:17.
|12:55 PM GMT – US||Redbook Index (Aug 2). JOLTS Job Openings (Jun) at 14:00, and IBD/TIPP Economic Optimism (Aug), and Fed’s James Bullard’s speech at 16:00|
|20:30 PM GMT – OIL||API Weekly Crude Oil Stock (Aug 2)|
|22:00 PM GMT – Australia||AiG Performance of Construction Index (Jul). Home Loans at 1:30 AM GMT (+1)|
|23:50 PM GMT – Japan||Foreign Reserves (Jul)|
|02:00 AM GMT (+1) – NZ||RBNZ Interest Rate Decision & Monetary Policy Statement|
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